The Cornballer, invented by George Bluth in the mid-1970s, is a device used to make cornballs. It sold for $29.95. Suppose that 10,000 Cornballers were sold in 1981; 11,000 in 1982; and sales increasing by 10% each year until it was last sold in 1990 (when it was made illegal). Assume an interest rate of 12% per year. Assume sales were made at EOY. What was the worth of these cash flows in 1980? Show in standard factor notation and show the cash flow diagrams.
The Cornballer, invented by George Bluth in the mid-1970s, is a device used to make cornballs. It sold for $29.95. Suppose that 10,000 Cornballers were sold in 1981; 11,000 in 1982; and sales increasing by 10% each year until it was last sold in 1990 (when it was made illegal). Assume an interest rate of 12% per year. Assume sales were made at EOY. What was the worth of these cash flows in 1980? Show in standard factor notation and show the cash flow diagrams.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The Cornballer, invented by George Bluth in the mid-1970s, is a device used to make cornballs. It
sold for $29.95. Suppose that 10,000 Cornballers were sold in 1981; 11,000 in 1982; and sales
increasing by 10% each year until it was last sold in 1990 (when it was made illegal). Assume an
interest rate of 12% per year. Assume sales were made at EOY. What was the worth of these cash
flows in 1980? Show in standard factor notation and show the cash flow diagrams.
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